He finds Budderball (Josh Flitter) on Santa's naughty list for eating the Thanksgiving turkey and figures he's just the dog to show him how to be an ordinary puppy.
Budderball and the other Buddies (Field Cate, Liliana Mumy, Skyler Gisondo, Ty Panitz), also lacking in Christmas spirit, believe that their father is Santa Paws in disguise, and that the naughty list is a way to scare them to behave.
Sniffer (Tim Conway) however replies that Christmas is about giving and a holiday they must learn to respect.
The North Pole puppy ends up being a nuisance to each of the Buddies: Budderball is framed for eating the shortbread cookies as he tries to get back on the nice list; B-Dawg gets beaten at breakdancing by Puppy Paws, who even accidentally breaks a vase; Puppy Paws, unaware not to do so, shakes dirt out of his fur in the living room after Mudbud gives him lessons on how to roll in the dirt, creating holiday shapes of the dirt spots which results in Mudbud being put in a cover-up coat for the rest of the day; Rosebud gets an extreme Christmas makeover, and Buddha's meditation statue is turned into a snowman as Puppy Paws explains that the snowman is "what citizens of the North Pole meditate in front of".
Puppy Paws gets taken away by dog catcher Stan Cruge (Christopher Lloyd), who takes him to the pound.
The film ends with the entire town (including the Buddies and Deputy Sniffer), led by Cruge, singing "Silent Night" in front of Fernfield's Christmas tree.